Reduction of official interest rate announced
The Monetary Policy Committee (MPC) of the South African Reserve Bank has decided to reduce the repo rate for the first time since March 2018. The announcement was made on Wednesday, 18 July 2019.
The repo rate is reduced by 25 basis points to 6,5% per year, effective from 19 July 2019. This means that the rate at which the SARB lends to your bank has decreased from 6,75% to 6,5%.
For employers, the official interest rate applicable to payrolls will be 7,5%, taking effect 1 August 2019.
The definition of “official interest rate” in the Seventh Schedule of the Income Tax Act means:
• In the case of a loan which is denominated in the currency of the Republic, the South African repurchase (repo) rate + 100 basis points; or
• In the case of a loan which is denominated in any other currency, the South African repurchase rate applicable in that currency +100 basis points.
Where a new repurchase rate or equivalent rate is determined, the new interest rate applies for the purposes of this definition from the first day of the month following the date on which that new repurchase rate or equivalent rate comes into operation.